“Continued Exchange Rate flexibility need of the hour to facilitate external adjustment to support exports and economic growth”, says Mr. Herald Finger of IMF.
Pakistan recently concluded a 9 day discussion with IMF Staff Mission led by Herald Finger. The first of the post-program monitoring discussion since the end of Pakistan’s Extended Fund Arrangement (EFF) in September, 2016.
Mr. Herald Finger lauded the betterment of security conditions in the country by saying, “It has been a great pleasure for mission to hold productive discussions in Islamabad … reflective of the improved security situation in the country”.
The IMF Mission during the 9 day visit in Islamabad met with Pakistan’s Economic Team representing the business community and academics. He acknowledged Pakistan’s effort by saying that, “The Mission would like to thank the authorities for their hospitality and constructive dialogue”.
Mr. Finger suggested a need for sustainable growth and development, mentioning “economy’s resilience will be important to maintain Pakistan’s favorable growth momentum and ensure sustainable private investment”. Pakistan’s rising imports have posed a cumbersome challenge to the economy, prompting Mr. Herald Finger to mention the increase in fiscal deficit in the last year. He mentioned the need for “greater efforts to prevent further build-up of vulnerabilities and persevere hard-won macroeconomic stability”.
He said that the “the move by State Bank of Pakistan to allow adjustment of exchange rate is welcome”, which will help facilitate the “external adjustment in support of exports and economic growth”.
The meeting revolved around addressing challenges faced by the local economy to develop a sustainable framework to continue on the growth trajectory. Steps such as, “pursuing medium-term fiscal consolidation by broadening tax base, strengthening monetary policy framework, containing external stability risks, eliminating the losses of public sector enterprises, improving business climate” must be taken in an effort to support inclusive growth.